Starting a Limited Liability Company (LLC)? One of the most important documents you’ll need—whether required by law or not—is an Operating Agreement.
Many new business owners skip this step, especially when they’re the only member of the LLC. But that’s a mistake. Having an Operating Agreement can save you from future legal and financial headaches.
Let’s break down what an LLC Operating Agreement is, why you need one, and how to write one easily.
✅ What Is an Operating Agreement for an LLC?
An Operating Agreement is a legal document that outlines how your LLC will operate. It acts like a rulebook for your business and defines the structure, roles, and procedures of your company.
Think of it as your LLC’s internal manual. It doesn’t get filed with the state but is kept in your records.
🧾 Is It Required by Law?
In many states, an Operating Agreement is not legally required to form your LLC—but it is strongly recommended, especially if:
- You have more than one member (partner)
- You want legal protection for your limited liability status
- You want to look professional to banks and investors
- You’re managing the LLC from outside the U.S.
States like California, New York, Missouri, and Delaware require an Operating Agreement (even if you’re a single-member LLC).
👉 Check state-by-state LLC requirements here
💡 Why You Really Need One — Even If It’s Just You
If you’re a single-member LLC, you might wonder: “Why do I need a document to talk to myself?”
Here’s why it matters:
- Proves your business is separate from you (essential for protecting your personal assets)
- Avoids legal confusion if you’re ever sued
- Helps open a bank account or apply for credit
- Provides clarity if you bring in new members later
Without an Operating Agreement, your business is governed by default state rules—which may not reflect how you want to operate.
📋 What Should an Operating Agreement Include?
A solid Operating Agreement covers these key areas:
- Basic Company Info
- LLC name, address, and registered agent
- Date of formation
- Purpose of the business
- Ownership Structure
- Member(s) names and ownership percentages
- Contributions (money, assets, services)
- How profits and losses are distributed
- Management Structure
- Is the LLC member-managed or manager-managed?
- Who has authority to make decisions?
- Voting rights, if multiple members
- Banking & Finances
- Rules for handling bank accounts
- How and when distributions are made
- Tax treatment (e.g., default, S Corp election)
- Operating Procedures
- How meetings are held
- How major decisions are made
- Recordkeeping rules
- Changes & Dissolution
- What happens if a member leaves or dies
- How to add/remove members
- How to close (dissolve) the LLC
🧠 Operating Agreement for Single-Member LLCs
If you’re the only member, your Operating Agreement can be short and simple, but it should still include:
- Your name as sole owner
- Statement that you’re the only decision-maker
- Banking and tax provisions
- Procedures for dissolution
This helps protect your limited liability status, proving to courts, banks, and the IRS that your business is not a sole proprietorship.
📄 Where Can I Get a Free Operating Agreement Template?
There are many places to download free or low-cost templates:
- Rocket Lawyer – Customizable templates
- LegalZoom – Affordable legal help and templates
- Northwest Registered Agent – Free templates when you form an LLC
- ZenBusiness – Offers free basic templates
You can also ask a legal professional to review your document if your business is more complex.
🔐 Do I Need to Notarize or File My Operating Agreement?
No, you don’t need to notarize or file it with the state (in most cases). However:
- Keep a signed copy in your business records
- Provide copies to other members (if any)
- Use it when applying for business accounts or resolving disputes
📈 Can I Update My Operating Agreement Later?
Yes. In fact, you should update it if your LLC:
- Adds or loses members
- Changes ownership percentages
- Elects a new tax classification
- Moves to another state
- Changes its name or purpose
Just create an updated version and have all members sign it.
✅ Summary: Why Every LLC Needs an Operating Agreement
Even if you’re a one-person business, here’s why having an Operating Agreement is essential:
| Benefit | Explanation |
|---|---|
| Legal Protection | Proves separation between you and the business |
| Flexibility | Lets you define your own rules instead of default state laws |
| Bank & Tax Compliance | Makes it easier to open accounts and file taxes |
| Professionalism | Shows you take your business seriously |
🛠 Need Help Creating Yours?
Let me know your business type, number of members, and your state—I’ll help you:
- Choose the right structure
- Provide a template or draft
- Build a compliance checklist
📩 Just ask, and I’ll walk you through it step-by-step.